Self-Employed US Expats: Complete Tax Guide for Freelancers & Founders

Being self-employed while living abroad gives freedom — but it also creates unique US tax obligations that many freelancers and founders misunderstand.

If you’re earning income outside the US, you may still owe US self-employment tax, even if you don’t owe income tax.

Who Is Considered Self-Employed?

You are considered self-employed if you:

• Freelance or consult

• Run an online business

• Own a foreign company

• Work as an independent contractor

This applies whether clients are US-based or international.

For a broader overview of expat obligations, start with our complete guide to US expat taxes:
👉 /complete-guide-us-expat-taxes

Do Self-Employed Expats Pay US Taxes?

In most cases:

• Income tax may be reduced or eliminated

• Self-employment tax often still applies

This is the biggest surprise for expats.

Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion allows qualifying expats to exclude earned income up to the IRS limit.

However:

• FEIE does not eliminate self-employment tax

• It only applies to earned income

• You must meet residency or physical presence tests

Many freelancers incorrectly assume FEIE means “no US tax at all.”

Self-Employment Tax Explained

Self-employment tax covers:

• Social Security

• Medicare

Currently, it’s assessed at 15.3% on net earnings.

This applies even if:

• You live abroad

• You pay foreign income tax

• You use FEIE

Unless a Totalization Agreement applies.

Totalization Agreements: The Key Exception

Some countries have Totalization Agreements with the US that prevent double Social Security taxation.

If you qualify:

• You may be exempt from US self-employment tax

• You’ll contribute to the foreign system instead

We explain this in detail here:
👉 /totalization-agreements-us-expats

Required Forms for Self-Employed Expats

Common forms include:

• Schedule C

• Schedule SE

• Form 2555 (FEIE)

• Foreign tax forms (if applicable)

If you also hold foreign bank accounts, you may need:
👉 FBAR filing → /fbar-foreign-bank-account-reporting-expats
👉 FATCA Form 8938 → /fatca-form-8938-expats

Common Freelance Mistakes

Self-employed expats often:

• Skip quarterly estimated taxes

• Misclassify foreign income

• Ignore Social Security obligations

• Miss FBAR or FATCA filings

If mistakes span multiple years, the Streamlined Filing Compliance Procedures may apply:
👉 /streamlined-filing-compliance-procedures-expats

Staying Compliant as a Global Freelancer

Self-employment abroad requires intentional planning, not guesswork.

Exemplary helps freelancers and founders structure their taxes correctly, minimize exposure, and stay compliant — without overpaying or risking penalties.